'You've got to be irrational sometimes'

Entrepreneur building an international company that delivers food dispenses some advice

When William Shu founded a food-delivery company in England three years ago, he was the first driver. Now the firm has 500 employees, hundreds of contracted drivers, 5,000 partner restaurants in more than 20 countries and has raised $100 million from investors.

"It's rewarding to see the firm expanding from city to city," says Shu, 36, a Chinese-American. "It's stressful, time-consuming and extremely fun from an emotional perspective."

Shu was speaking at the University of Oxford's Said Business School, where he gave a talk at the Oxford-China Forum on entrepreneurship. Dressed in jeans and a casual shirt, he resembles the typical technology startup personality. But things were not always this way.

Shu, who was born and raised in Connecticut to Chinese parents, had a traditional Chinese upbringing, where hard work is valued and a highly paid job is seen as the preferred career pathway. After graduating from Northwestern University in Chicago he landed an investment banking job at Morgan Stanley in New York.

"Back then, we were working 100 hours a week, and we ate dinner every day with a $25 stipend, and that was the highlight of our day," Shu says.

New York's food-delivery scene was every bit as good as Shu had expected, so when he was transferred to Morgan Stanley in London in 2008 the paucity of good food-delivery services surprised him.

"The hours were the same and I would end up having to walk to Burger King or Tesco, which was pretty depressing."

He began to think about starting a food-delivery company, but back in those days the logistics could not support it. Smartphones were not nearly as common as they are now, and smartphone applications were at a rudimentary stage of development, so real-time information could not be shared between customers, restaurants and drivers, meaning quick delivery could not be guaranteed.

The London food delivery scene was just taking off, with the help of delivery firms such as Just Eat, which was founded in Denmark in 2001 and expanded to London in 2006. Just Eat connects restaurants and customers, but Shu did not like the idea of restaurants delivering food themselves because of what he saw as inconsistent service.

He went back to study for an MBA at Wharton Business School at the University of Pennsylvania, and when he graduated in 2012 he realized the timing was right for Deliveroo, which he founded in 2013 with a childhood friend, Greg Orlowski.

Central to Deliveroo's business model is the firm's network of drivers on motorcycles, who may be students or part-time workers. Deliveroo uses sophisticated technology algorithms to make sure restaurants and customers have real-time information of the location of the driver. This, the company says, results in consistent service and an average delivery time of 30 minutes.

The business charges restaurants 25 percent of the food's price as commission, a cost the restaurant, rather than the customer, covers, plus a charge of 2 pounds and 50 pence ($3.50). The business rapidly took off, and is now in partnership with 5,000 restaurants worldwide, including Dishoom, Ping Pong, Dirty Burger and even Michelin-starred Trishna in London.

Deliveroo is available in 30 UK cities and 20 cities elsewhere, mostly in Europe. The startup is now making forays into Dubai, Hong Kong, Singapore and Australia. The secret to building up volume is to expand from neighborhood to neighborhood, as density matters to the customer experience, Shu says. "We don't have to go to an entire city straight away."

Shu says China and the US have big potential but business expansion is difficult. Common to both markets is their large populations, which means technology firms that want to grab market share are undercutting competitors' costs by constantly giving out discounts and offers. It creates a competitive market in terms of cost, but Shu believes it is unsustainable.

"The platform technology market enabled by smartphone applications like Uber and its Chinese equivalent Didi Kuaidi is new and emerged in recent years, so market players are still trying to work out how it works. In countries with big populations, Uber and Didi Kuaidi are trying to drive each other out through costs. This can't be the long-term solution, and we will wait to see what happens when the competition settles down before entering the market."

Despite the difficulty of bringing Deliveroo to China, Shu says his Chinese upbringing had a strong impact on him, and one obvious effect is his love for Chinese food. Chinese noodles and dumplings are his favorites. Perhaps the entrepreneurial spirit of Chinese people also influenced Shu to a certain extent, and he said the job is now very rewarding.

"It's rewarding to see you're doing something that changes the way people transact. You're also building a team of people around you."

His early banking career gave him the important tools of discipline and an analytical framework, but one crucial ingredient of the successful entrepreneur is to be irrational, he says.

"You've got to be irrational sometimes, because if you're rational all the time then what you end up doing is what other people have done already."

cecily.liu@mail.chinadailyuk.com

(China Daily Africa Weekly 03/11/2016 page29)